Music Business News, March 14, 2017

Pandora said it will launch its on-demand streaming service on March 15. And more than 4,000 songwriters signed a petition demanding better streaming royalties. Also, big brands said they are pulling away from SXSW this year.

Pandora Premium Launching March 15

Pandora announced it will launch a new paid streaming service on March 15 with a free trial for U.S. users. According to Time, its search features may make it more competitive with market leader Spotify than services like Apple Music.

The service, Pandora Premium will be $9.99 per month. For years, Pandora has been based on music stations built around specific artists or albums. For $4.99 monthly, users could skip ads, jump to the next song, replay tracks and download stations to listen offline. Pandora Premium is its first on-demand offering.

The streaming market is becoming more crowded during the past couple years, with competing music services struggling to differentiate. Pandora will rely on its music analysis program, fueled by the Music Genome Project. This program features an enhanced search engine and playlists that automatically populate based on listening habits. As an example, users can start a playlist with just a couple songs and then tap the “Add Similar Songs” button to populate the reest of the list. A Pandora spokesperson said its search engine also produces results that get more accurate over time.

Services like Spotify are more focused on playlists based on mood and genre curated by users.

Pandora’s new Premium tier offers a playlist consisting of every song that has ever been “thumbs-upped” by a user. Users will also be able to download albums and playlists to listen to offline, a feature Spotify also touts.

Pandora’s new on-demand streaming option is coming at a time when competition between Spotify, Apple and Amazon has heated up and all are trying to grab new members. Spotify recently launched a suite of features designed to improve curation, like Daily Mix and Release Radar. Apple decided to up its game on exclusive content.

4,000 Songwriters Signing Petition for Better Streaming Royalty Rates

The National Music Publishers’ Association (NMPA) collected 4,000 songwriter signatures last week in an effort to get through to the Copyright Royalty Board last week and to demand better mechanical royalties for interactive streaming from Google, Apple, Amazon, Spotify and Pandora. Signees included Bruce Hornsby, John Densmore, Herb Alpert, Desmond Child and Paula Cole.

Billboardreported that the campaign launched just before a court hearing in Washington on March 8 where the CRB was starting to set royalty rates for the next five years.

In a letter, the NMPA wrote, “This week the most important trial most people have never heard of will begin in Washington, D.C. … On one side, giant technology companies Google, Apple, Amazon, Spotify and Pandora will argue to reduce the already low mechanical royalty rates they pay to play your songs. On the other side will be your music publisher, through the National Music Publishers’ Association, fighting alongside the Nashville Songwriters Association International (NSAI) for a much needed increase in the royalties you are paid.”

The NMPA also said that tech companies are creating new ways to distribute music, but “are also fighting in this trial to pay as little as possible to songwriters for the songs that drive their businesses.”

Interactive streaming has become the predominant form of music consumption, but it has also been used to sell other products and services, including the Amazon Echo and Google Home devices, iPhones, Beats headphones and subscriptions to Amazon Prime.

To that end, the NMPA said, “If Amazon is using your music to sell Echos or Amazon Prime subscriptions, it should be required to share with you the benefits received.”

The letter added, “NMPA is working on your behalf to achieve better, fairer royalty rates for all songwriters and music publishers … Our proposal asks the CRB to adopt a structure that recognizes the inherent value of a song, the value of a subscriber’s payment to access those songs, and all of the revenue that digital services generate from offering your music.”

Big Brands Avoiding SXSW This Year

Major brands like Samsung said they are opting out of having a presence at SXSW 2017. And Spotify, Fader Fort, Bud Light and others have scaled back their involvement as well. According to The Hollywood Reporter, industry insiders claim costs, clutter, changing tastes and the tight Austin real estate market has shifted brand spending at the festival considerably.

This year, there are 350 sponsored events in Austin, TX for the 31st installment of the music, film and tech festival – 100 fewer than were scheduled last year.

Branding specialist Jennifer Sinski, VP of the Austin PR firm Giant Noise and founder of RSVPster.com explained, “What we’ve maybe lost is some of that over-the-top spending – the spring break-style free-for-all … The marketing has changed.” She noted that companies like Spotify are now doing more “highly curated, private events” geared towards specific influencers with social media followings rather than big public concerts for the public.

Andrew Lee, founder of the site that tracks the 350-plus events around Austin for the festival this year, UnofficialSXGuide.com said he believes the decrease is about 25 percent. He added, “I just remember being completely overwhelmed this week last year, on Twitter all day, scheduling posts … It was nonstop. There’s definitely a noticeable difference.”

However, he did note that parties and performances do often get added at the last minute.

Agents, ad executives, PR representatives and emerging artists told Billboard that the pull-back from bigger brands may benefit the festival long term, because the festival was in need of a course correction.

JSM Music CEO Joel Simon explained, “What it’s doing is evolving … That happens with anything that’s been around a long time, especially something that merges art and commerce. You’ll always have the diehards who long for the days when it was fresh and grungy and hip and dirty … But if you’re Samsung, or anyone on that level, you go big or go home.”

He continued, “To really have a presence, the investment has to be extraordinary: It has to be the most coveted event, the No. 1 ticket. That’s a commitment. All brands have to evaluate if they’re going to go down there and spend a few million dollars – is it going to move the needle?”

Experts said that some brands are re-evaluating their approaches to Austin as SXSW gets more and more crowded each year. CEO of Zimmerman/Omnicom, Michael Goldberg said this has been happening for a while: “What was once about the magic of discovery, be it music or innovation, is now a brand traffic jam.”

Samsung and the official SXSW sponsor McDonald’s did not respond for requests for comment, when just a few years ago, all brands were excited to share their SXSW initiatives with reporters.

Austin’s blossoming real estate market has also made the festival more complicated, with an empty field garnering more than $35,000 per day. In-demand real estate has also meant the death of some venues and open event spaces, as parking lots and other areas have been turned into apartment and retail complexes.

SXSW’s director of global sponsorship, Scott McNearney claimed the festival is not seeing fewer brands, rather “far fewer empty places and empty buildings. There are a lot of factors that contribute to how brands are activating at South By this year.”

Some brands are still creating a spectacle, as has become the norm at the festival. TNT is reporting the return of its summer drama, Animal Kingdom with a high-cost FlowRider wave pool featuring cabanas and free bathing suits.

Pandora will also be taking over The Gatsby for its yearly Discovery Den, a spotlight of emerging artists, including Austin-based singer/songwriter Charlie Faye, leader of girl group Charlie Faye and the Fayettes.

When asked about the disappearance of brands, Faye said, “I don’t fear for the financial health of South by Southwest … I don’t imagine it’s shrinking, just like I don’t think that being big means it’s ineffective.” Faye signed a sync deal last year with Bank Robber Music after an informal interaction at a panel session. She said that the festival still produces plenty of opportunities to meet people.

Josh Rabinowitz, executive VP and director of music at Townhouse/WPP agreed with Faye: “I still feel like this whole branded, connecting artists with brands, activations, experiential marketing is not out of vogue yet … For a while, it was really hot and sexy and alluring for musicians and brands to commingle. It was like a honeymoon.”

He added, “Now it’s kind of a marriage … And you want to keep the marriage in a meaningful, loving place.”